The City of Twin Falls is taking precautionary steps to curb spending as the economy continues to falter.

City officials announced Friday that significant declines in state sales tax and residential building permits could reduce general revenues during the 2008-09 fiscal year by as much as $300,000.

The city will reduce future expenditures by placing all capital improvement projects on hold, holding open many vacant employee positions, and possibly reprioritizing already approved expenditures, said City Manager Tom Courtney.

Public safety jobs will be filled as needed, the city said.

Courtney said the city began the budgeting process for the current fiscal year in March - long before the collapse of the major banks and of the national economy.

"At this point what steps we are taking are precautionary,"he said. "By being conservative in our spending now, we hope that we won't have to resort to service cutbacks or layoffs."

City officials estimate the net impact of the economic slowdown could reduce general revenues about 1 percent.

Based on receipts from last year, the city believes its revenue projections could be off by as much as $300,000. However, the city also expects other revenue sources, such as road, bridge and highway tax, will offset the shortages by as much as $50,000 to $100,000.

In August, the city adopted a $50 million-budget for the 2008-09 fiscal year. The city has more than 340 full-time employees.

According to a report by the Associated Press, more than 65 percent of local governments have cut spending, with municipalities in states that rely most on property tax revenues the hardest hit.

Twin Falls officials say the contingency plan is temporary, until local economic conditions improve.

"We believe all projects approved in the budget are important, and we will continue to watch the state and local economy and closely monitor revenue trends," Courtney said. "Once a degree of certainty and stability returns, controls will be lifted."

Joshua Palmer may be reached at 208-735-3231 or at jpalmer@magicvalley.com.